Education and Advocacy As Canadians, we are rightfully proud of our public health care system, but many of us are unaware of how vital the collaboration between the public and private health care sectors is to keeping Canadians healthy.

Stephen Frank

Vice President, Policy Development and Health, Canadian Life and Health Insurance Association

David Willows

Vice President, Green Shield Canada

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More than three-quarters of Canadians have supplemental health care coverage, and over 50% of all prescription drug spending in the country is reimbursed by a private payer. An influx of new high-cost treatments, however, is threatening the stability of our mixed public-private system.

Traditionally, the majority of drug spending in Canada has been on medications that are both relatively inexpensive and commonly prescribed, such as antibiotics and painkillers. In recent years, though, that balance has started to shift. “It’s taken us a little bit by surprise,” says Stephen Frank, Vice President of Policy Development and Health at the Canadian Life and Health Insurance Association. “We’ve always in the past thought about two types of drugs: the common low-cost drugs that have a lot of people on them but are relatively cheap, and then the relatively rare but very expensive drugs.”

Drugs in the highest-cost tiers are becoming more common

The number of these specialty drugs keeps growing however, and some of the more expensive new treatments are for diseases that are far less rare. “In the last two years we’re starting to see more drugs that are both very high cost and very large volume,” says Frank. “No one really anticipated that happening. When you’ve got tens of thousands of people on a drug, and the cost is still tens of thousands of dollars plus per year, it becomes very difficult for the system to absorb that cost and for employers to continue to offer comprehensive coverage to their employees.”

“We certainly believe in this country that no one’s financial livelihood should be put at risk because of an illness."

This increase in cost is rapidly forcing the industry to a breaking point where something will have to give. As medical science continues to progress, and innovative new treatments for diseases like cancer, hepatitis C, and rheumatoid arthritis continue to enter the Canadian market at unsustainable price points, either insurance premiums will have to rise dramatically or a line will have to be drawn regarding just how much we are willing to spend to ensure that Canadians get the best treatment available.
The danger is that either path could introduce new barriers to access for Canadians seeking treatment. Those barriers could arise either directly, through innovative but expensive treatments being dropped from coverage altogether, or indirectly, as rising premiums price Canadians out of comprehensive coverage. For many, including those in the private health insurance sector, neither alternative is acceptable. “We certainly believe in this country that no one’s financial livelihood should be put at risk because of an illness,” says David Willows, Vice President of Strategic Market Solutions at Green Shield Canada.

Finding the third path

Fortunately, some within the industry see a third way: leveraging the buying power of the Canadian market to negotiate better drug prices. “Canadians are simply paying too much for drugs, if you do an international comparison,” says Willows. “On both the public and private side there is this feeling that we have crossed the line and some of these prices are just unreasonable.”

The crux of the issue is Canada’s failure to present a unified front to pharmaceutical companies in the negotiation of drug prices.

The crux of the issue is Canada’s failure to present a unified front to pharmaceutical companies in the negotiation of drug prices. With each province having its own public health insurance system, and with a large number of private health insurance companies across the country, the market in Canada remains highly fragmented. Increased collaboration could play a critical role in helping to negotiate drug prices down to a sustainable level. “If we can consolidate the full buying power of the Canadian market, there is real opportunity to bring prices down for all Canadians,” says Frank. “But if we stay divided, it’s going to be a challenge for us to get a handle on this situation. Provinces and private insurers need to be working together for the benefit of all Canadians.”

One thing is clear: this is a problem that needs to be solved today. “The crunch is coming in closer to five years than ten,” says Willows. Progress on this issue is going to be reliant on an open conversation between the public side, the private side and the pharmaceutical companies. That conversation is already beginning to happen, but all Canadians need to keep their ears open and ensure that the dialogue continues.